Dollar Tree Inc (NASDAQ:DLTR) highlighted what it described as "robust" quarterly results with same-store sales up 7.8% across flagship Dollar Tree branded stores, whilst its Family Dollar stores improved by 5.8%.
Second-quarter revenue was reported at $7.325 billion, easing above analyst forecasts of $6.789 billion. Earnings per share were marked at 91 cents for the quarter, also beating expectations, pitched at 87 cents.
It comes as shoppers ‘trade down’ into discount retail stores for a higher proportion of their spending, amidst a tightening of household budgets as inflation and higher interest rates squeeze the cost of living.
Chief executive Rick Dreiling, in today’s statement, pointed to a rise in store footfall and market share gains for both Dollar Tree and Family Dollar brands.
Dollar Tree stock immediately slumped in premarket deals, however, as investors reacted to new full-year guidance anticipating $30.6 billion to $30.9 billion of sales, ahead of analyst consensus of $30.4 billion – but earnings guidance is pitched in a wide range between $5.78 to $6.08 per share, versus analyst projects previously set at $6.03.
Chief financial officer Jeff Davis noted margin pressures and the company’s ongoing efforts to "transform" the business.
“While factors like sales mix and elevated shrink continue to pressure margins, we generated a year-over-year increase in gross profit dollars,” Davis said.
“We are pleased with the progress of our transformation to date and remain confident in our ability to deliver our growth objective of $10 or more of diluted EPS by 2026.”
The group said it opened 118 new stores in the quarter and completed 276 store renovations.
In New York’s premarket deals, Dollar Tree stock was down $10.16 or 7.14% trading at $132.06 per share.